Jean Meyer and Sheri Roswell | Higgins, Hopkins, McLain & Roswell, LLC | September 25, 2018<\/p>\n
In excess of 30 states have enacted tort reform legislation requiring property owners to notify construction professionals of the presence of alleged construction defects prior to the commencement of a lawsuit. These statutes also often permit construction professionals to make an offer of repair within a statutorily defined period of time after receipt of a notice of claim letter. Undoubtedly, the notice-of-claim process has played a meaningful part in bringing construction professionals and claimants to timely resolutions of construction defect concerns in isolated instances.<\/p>\n
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However, while these statutes are commonly referred to as \u201cright to repair\u201d legislation, their practical effect is often reduced to little more than procedural empty gestures serving as a prelude to litigation. This article will briefly survey the \u201cright to repair\u201d statutes in Colorado, Montana, North Dakota and South Dakota. In Nebraska, New Mexico, Utah and Wyoming there is no right to repair or notice-of claim statue.<\/p>\n
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COLORADO<\/strong><\/p>\n Pursuant to C.R.S. \u00a7 13-20-803.5, the \u201cright to repair\u201d process begins when a property owner delivers a \u201cnotice of claim\u201d letter to the construction professional. The construction professional then has 30 days to inspect the property, according to C.R.S. \u00a7 13-20-803.5(2). Upon completing the inspection, the construction professional has an additional 30 days to offer to settle the alleged construction defects by means of payment or by offering to remedy the alleged construction defects through remedial work. \u201cA written offer to remedy the construction defect shall include a report of the inspection, the findings and results of the inspection, a description of the additional construction work necessary to remedy the defect described in the notice of claim and all damage to the improvement to real property caused by the defect, and a timetable for the completion of the remedial construction work\u201d as stated in C.R.S \u00a7 13-20-803.5(3).<\/p>\n \n However, an owner is under no obligation to accept a construction professional\u2019s offer of monetary compensation or repairs, regardless of how reasonable it may be based on C.R.S \u00a7 13-20-803.5(6). Recognizing the practical reality that the \u201cright to repair\u201d exists in name only for Colorado construction professionals, Colorado\u2019s legislature introduced House Bill 17-1169 on February 6, 2017. HB 17-1169 would have statutorily permitted construction professionals to perform repairs in response to a notice of claim letter. In the words of the bill: \u201c[i]f the Construction Professional [were to give] notice of an election to repair the defect in accordance with [the statute], the Claimant shall provide the construction professional with unfettered access to the subject property as necessary to correct the construction defect. . .\u201d Unfortunately, on March 1, 2017, Colorado\u2019s House Committee elected to postpone any vote on HB-1169 indefinitely.<\/p>\n \n In sum, in Colorado, construction professionals have the right to offer to make a repair. Owners have no obligation to accept a construction professional\u2019s offer of repair.<\/p>\n \n MONTANA\u00a0<\/strong><\/p>\n Montana\u2019s construction defect statute is substantially similar to that of Colorado\u2019s. Specifically, M.C.A. \u00a7 70-19-427 requires a residential homeowner to serve a written notice of claim on the construction professional prior to the commencement of a lawsuit. The notice of claim must state that the homeowner is asserting a construction defect claim against the construction professional and must describe the claim in reasonable detail. Thereafter, the construction professional has 21 days to respond to the homeowner by proposing an inspection of the property, offering to compromise or settle through a financial settlement or repair, or denying liability. As with Colorado\u2019s statute, the homeowner is under no obligation to accept a construction professional\u2019s offer.<\/p>\n \n Additionally, M.C.A. \u00a7 70-19-427(3)(b) allows the homeowner to reject the inspection proposal. Nevertheless, if the homeowner elects to allow the construction professional to inspect the property, within 14 days following the completion of the inspection, the construction professional is obliged to provide the homeowner with an offer to compromise via a monetary payment, a written offer to remedy the claim through a combination of repair and monetary payment, or a written statement setting forth the reasons why the construction professional will not proceed to remedy the alleged defect. The homeowner must then, within 30 days, accept or reject the construction professional\u2019s proposed resolution. If the homeowner rejects the offer of repair or settlement presented by the construction professional, the homeowner must serve written notice of the homeowner\u2019s rejection to the construction professional. After delivery of the homeowner\u2019s rejection of the proposed settlement, the homeowner is free to commence a lawsuit against the construction professional.<\/p>\n \nNORTH DAKOTA<\/strong><\/p>\n North Dakota\u2019s statutory construction defect notice and offer of repair requirements are unique compared to the foregoing states. Specifically, N.D.C. \u00a7 43-07-26 precludes residential homeowners from undertaking any repair, other than emergency repairs, or commencing a lawsuit prior to providing notice to the construction professional of the alleged defect. Thereafter, \u201cwithin a reasonable time after receiving the notice, the contractor shall inspect the defect and provide a response to the purchaser or owner, and, if appropriate, remedy the defect within a reasonable time thereafter,\u201d according to N.D.C. \u00a7 43-07-26. Compared to the language of the other states examined in this article, North Dakota has, by far, the most favorable statutory regime for construction professionals. The homeowner must allow the construction professional to inspect the property and the construction professional is actually afforded the \u201cright to repair.\u201d<\/p>\n \n SOUTH DAKOTA<\/strong><\/p>\n Pursuant to S.D.C.L. \u00a7 21-1-16, South Dakota maintains a statutory regime requiring residential homeowners, prior to commencing an action, to serve a written notice on construction professionals setting forth the alleged construction defects present at the property. Additionally, the statute requires that the residential homeowner allow the construction professional to inspect the property within 30 days after service of the notice and allow the construction professional to make a written offer to repair or an offer of monetary settlement. While the homeowner is under no obligation to allow the construction professional to perform the repair offered, if any, the homeowner is required to wait until 30 days after the notice of claim is served on the construction professional or until the construction professional refuses to remedy the alleged construction defect prior to commencing suit.<\/p>\n \n